The U.K.’s economic recovery slowed this month, adding to signs the nation’s consumer-led rebound is running out of steam. IHS Markit’s flash composite Purchasing Managers Index slipped to 55.7 in September from 59.1 a month earlier. That’s still above the critical 50 mark that indicates expansion but the weakest reading since June.
“The initial rebound from Covid-19 lockdowns showed signs of fading,” said Chris Williamson, an economist at IHS Markit. “Growth could fade further as we head into the winter months, especially as lockdown measures are tightened.” The outlook dimmed further on Tuesday after the government said office employees should work from home for six more months and restricted pub hours to contain a resurgence of the virus. Bank of England Governor Andrew Bailey said there are still “hard yards” ahead to regain the output lost to the pandemic.
The preliminary index of services activity declined to 55.1, also a three-month low, Markit said. Restaurants particularly struggled due to the withdrawal of the government’s Eat Out to Help Out program, which subsidized meals.
Employment slumped at a sharp pace with firms suggesting that the winding down of Chancellor Rishi Sunak’s furlough program was accelerating decisions to shed staff. Business optimism was the weakest since March.